Financial, economic and strategic issues concerning the decision to invest in advanced automation

SUMMARY The major contribution of this paper is to provide a synthesis of the capital budgeting problems when dealing with advanced automation projects. First, we identify and form expectations of the future cash flows while paying particular attention to the indirect, non-pecuniary effects. Second we use tools from modern finance-theory, such as the Capital Asset Pricing Model, to evaluate the riskiness of the component cash flows and arrive at...